Analysis of Dogecoin's Recent Price Drop

Dogecoin witnessed a notable 5% decline, hitting a daily low of $0.16192 on May 28. This drop exceeded the overall cryptocurrency market fall of approximately 1.47% during the same timeframe. The fall in DOGE's value follows a 3.2% decrease in Bitcoin's price over the last 24 hours. Despite recent gains with a 7.5% increase in the past month, the cryptocurrency's value is now experiencing a downturn.

Reasons Behind Dogecoin's Decline

Between May 22 and May 26, Dogecoin's price began to decrease and is currently trading 2.5% lower than its value a week ago. Coinglass, a blockchain data analysis platform, observed a 37% decline in open interest (OI) in futures contracts related to DOGE. The OI dropped from $1.67 billion in mid-April to $1.04 billion, coinciding with this recent price decrease.

Impact of Funding Rates and Market Sentiment

The funding rate for Dogecoin's perpetual futures contracts also dipped, from 0.0243% on May 23 to 0.0118% on May 28. Decreasing funding rates and OI levels reflect a bearish sentiment among investors, potentially increasing selling pressure on DOGE.

Predictions for Dogecoin's Future

As part of the market-wide correction that led to significant liquidations, Dogecoin's price declined to $0.1512. Notably, there has been increased whale activity in DOGE, with large transactions exceeding $100,000 becoming more prominent. Institutional investors are capitalizing on gains, driving the ongoing correction.

The recent price fall in Dogecoin was influenced by a bearish divergence between its price and the relative strength index (RSI) on the weekly scale. Despite price highs observed from April 15 to May 28, the daily RSI showed lower levels, hinting at weakness in the upward trend and prompting traders to secure profits.

IntoTheBlock's IOMAP model indicates support for DOGE near the $0.165 mark, with resistance between $0.163 and $0.168. Around 97,980 addresses have purchased approximately 7.03 billion DOGE in this range, suggesting potential selling pressure and a probable price drop. The 50-day simple moving average at $0.10 stands as a critical support level.